March 13, 2020 - What does a potential U.S. Small Business Administration Economic Injury Disaster Loan (EIDL) Declaration mean for businesses in California? 

New federal legislation and appropriations has opened up the possibility for small businesses to receive assistance for economic loss due to COVID-19.  Details of eligibility and administration of this assistance from SBA are still being addressed by the SBA.  However, some information from the traditional SBA Economic Injury Disaster Loan (EIDL) program will still apply for COVID-19.  

• If a small business has suffered substantial economic injury as a result of COVID-19, it may be eligible for financial assistance from the U.S. Small Business Administration.
• U.S. Small Business Administration is allowing businesses to forecast economic losses due to events that bring in high revenues being canceled due to the COVID-19.
• Small businesses and small agricultural cooperatives that have suffered substantial economic injury may be eligible for the SBA’s Economic Injury Disaster Loan (EIDL) Program. 
• Substantial economic injury is the inability of a business to meet its obligations as they mature and to pay its ordinary and necessary operating expenses. 
• An EIDL can help meet necessary financial obligations that a business could have met had the disaster not occurred. 
• It provides relief from economic injury caused directly by the disaster and permits the business to maintain a reasonable working capital position during the period affected by the disaster. 
• The SBA provides EIDL assistance only to those businesses that SBA determines are unable to obtain credit elsewhere.  
• The loan amount will be based on the business’ actual economic injury and financial needs. 
• The interest rate on EIDLs cannot exceed 4 percent per year. 
• The term of the loans cannot exceed 30 years.
• Terms and conditions will be determined by the business’ ability to repay the loan.

IMPORTANT NOTE: The Estimated Adverse Economic Impact Section needs to be fully completed, with all questions answered regarding business revenues, whether there was any business interruption insurance, as well as the comments section. The comments section “Please provide a brief explanation of what adverse economic effects the disaster had on your business:” must indicate that the economic impacts are a direct result of COVID-19. Please be sure the worksheets are completed prior to sending to Cal OES to prevent delay of qualifying the worksheet(s).

How do counties qualify for a U.S. Small Business Administration Economic Injury Disaster Loan Declaration? 

A county must provide one Economic Injury Worksheet for at least one business demonstrating economic loss due to COVID-19.  There must be a minimum of five Economic Injury Worksheets submitted statewide for California to be eligible.  If a county were to be approved for the SBA Economic Loss Declaration, then each contiguous county around the declared county would be eligible for SBA economic injury assistance. Please provide completed worksheet(s) once received to Cal OES. REMINDER — this is not a loan application but only to qualify the county!

When will more information be available?  

Detailed SBA guidance for COVID-19 is still being developed by SBA and should be available in the next several days.  As soon as further information is available, we’ll provide it to you.  We ask that you work directly with The California Governor’s Office of Emergency Services and not directly with SBA during this process. 
Source: CalOES